It could be the deal of a lifetime or your client's worst nightmare. But just because a house has been condemned doesn't mean it can't be a fit for buyers who don't mind a little risk.

First off, it's important to understand the definition: A condemned property is simply one that the government has taken over from a private owner, according to Desare Kohn-Laski, broker and owner of Skye Louis Realty in Coconut Creek, Fla. This can happen for a number of reasons: if the home has stood vacant (typically for more than 60 days), utilities have been discontinued, or an inspector discovers specific hazards.

"You certainly can buy it," says Kohn-Laski. "In some cases, you may need to tear down an existing structure and start over. In others, you can make changes to the property that are in compliance with the city's codes, thus 'lifting' its condemned status."

Condemned homes often sell for little more than the value of the land, which may amount to just a few thousand dollars. That means clients may be able to rehab the house and then increase its value significantly.

But these transactions may take more time to navigate, since you usually must work with a bank or the government to purchase a condemned property. Buyers will need to know what, or if, any violations or liens are attached to the property's title.

Financing can also be a hang-up for some buyers looking to go this route.

"Most traditional lenders only lend based on the condition of the property as it currently exists," says Christy Murdock Edgar, a real estate practitioner in Northern Virginia and Washington, D.C. "There may be many costs associated with rehabbing a condemned property that aren't covered by the lending process."

Buyers may need to consult a private lender to structure a loan based on the property after rehabbing it so they can combine demo and construction costs into one lump sum. Or, buyers can set up a short-term loan if the intent is to flip the property.

There are plenty of risks purchasing a condemned home – and the cost of restoring the home could be higher than the value of the house.

"If (the condemnation) was due to severe structural or repair issues, you might end up losing a lot of the value in the cost of rehabbing the property itself," Edgar says.